[Podcast] Determining The Needs of Your Small Business - Health Insurance Simplified
In This Episode
In this episode of Health Insurance Simplified, we discuss health insurance fundamentals — determining the needs of your small business.
Alan Helgeson (Host): You invest a lot into your business and employees — time, money, sweat equity and much more. You might be missing out on that investment that can help you in just about every front. Offering health insurance and purchasing group health insurance might seem like just one more expense that eats away at the bottom line, but it could make a difference on a very competitive pathway to success. Hi, I'm Alan Helgeson and this is Health Insurance Simplified. Today, our focus is on health insurance fundamentals — determining the needs of your small business. Joining me are Hollie with Sanford Health Plan and Carlos with CRC Capital Group. Welcome guys.
Carlos Cobos: Thank you, Alan.
Hollie Scott: Thank you, Alan. Good morning.
Host: Carlos, let's start with you. Why should a business owner consider purchasing group health insurance for employees?
Carlos Cobos: The biggest reason that we see when an employer comes to the point where he's considering offering employee benefits is that attracting and retaining good employees. And without a benefits package, it gets harder and harder. The employer is often worried about costs. What's the insurance going to cost me, but he's also very aware that turnover has a huge cost to him as a business, and it affects his productivity directly.
Here's how that hiring process goes: first, he sits down in front of his computer, and he gets somewhere to place an ad and it says, "Please enter your job description here." And he thinks, "I don't have a job description. I need to write a job description," but he's not a creative writer. So now he's spending the next few days trying to write a job description, asks his spouse about it, asks other employees about it, asks his best friends about it, and finally, a 16-year-old in high school writes the job description for him just to give him a hand.
When he finally gets a job description and now he is ready to get that online, but he goes to Indeed and Monster. He's not sure what to do because then his friend says, "Well, have you tried this app?" or that app or whatever, to place the ad, and so he ends up going to the coffee shop and putting his ad on the bulletin board there that his 16-year-old in high school wrote for him. He still was not sure that is going to work or not, but he's got two weeks into it and he's invested in it. This is what he needs to do to try to find somebody to come to work for him.
So now he starts collecting resumes, right? He starts going through them. He starts making phone calls for the potential applicants and starts scheduling interviews, starts having people coming in, going through the interview process. Finally, he finds a couple of candidates that he really likes that see real potential. They start talking and then they say, "Well, what about benefits, Alan?" and he says, "Well, I don't offer benefits." They say, "Well, my other job, they offer me benefits and very competitive pay." He said, "Well, I'll give you two more dollars an hour." That potential candidate calls me up and says, "Carlos, what's potential insurance cost me because I'm thinking about changing jobs and my new employer doesn't offer benefits. Can you help me out here?" So I give them a price on health insurance, dental, vision, everything that he is walking away from, and this is hard because the potential of gain hardly ever overcomes the pain and fear of a loss.
So when you take something away from somebody, those benefits that that potential applicant is walking away from, asking him to walk away from that, not replacing it with anything is really hard for him to do. So now you finally come to an agreement, though, and you've hired them. Well, now you've got to do the W-4, I-9, make sure he gets the employee handbook, get everything over to payroll, do the introductions, get them through training and 6 months later, he finally reaches the potential that you hired them for. Then, 6 months after that, he's gone and you have started the process all over again. So that employee turnover that a person just thinks, "Well, I'm just going to hire somebody," is really a process and to that small business owner, time is a commodity that he just can't afford to waste writing job descriptions, doing all those interviews, looking for people, so having a benefits package in place to help retain those employees really does benefit the small business.
Host: So that's a big deal when you're looking to get new employees or you're having to get new employees, because it takes these leaders away from the things that they're really good at leading their organization, right? Carlos?
Carlos Cobos: Absolutely. And over the past year, thoughts on employee benefits are always evolving. What people thought about employee benefits 20 years ago, 10 years ago, even 40 years ago is a lot different than what people are hearing today about the benefits packages. So after seeing several seminars, webinars, reading a lot of white papers, people are concerned about their wellbeing, their safety, their protection. And you see employers, their thoughts have evolved quite a bit also. And they are now realizing that they have a certain level of responsibility for an employee's physical health, social health, financial health, mental health, and those benefits all come into play to help take care of that employee. As employers are really committing themselves to the success of their employee, those benefits packages become more and more important to both of them.
Host: As you're talking about that, Carlos, leading to my next question: As an employee, that I work for an organization as an employer, if they're providing the benefits like this, will it help in perhaps general health and wellness for me, as far as maybe bringing down those sick days and some of the things that may take me out of it if there's a package that offers preventive care?
Carlos Cobos: Absolutely. When the ACA first started and the attention towards healthcare started coming around, I don't know that it was a wellbeing top of mind. Wellness was as important to people as, as they are now, but now you see employers trying to gain a competitive edge, and that competitive edge anymore comes from the people they employ. And if that person is worried about their own health or the health of their children, the health of their family, they are stressed. And there is an increased and sustained stress that everybody has been through. A lot of times their minds are somewhere other than on the job. And knowing that they have their health benefits taken care of, that they can go in, they can get checked out, they can go see a doctor. They can make sure they're doing well, rather than coming to work, feeling sick or feeling worried about something else. They're able to focus on the job at hand and be a better, more productive employee.
Host: Now, Hollie, I wanted to ask you, too, with Sanford Health Plan, as we're talking about this type of care and helping our employees become healthier and stay healthier, what are some of those perks in preventive care options that Sanford Health Plan offers?
Hollie Scott: All of our small group plans come with all the essential health benefits the ACA outlines. So some of those are outpatient care emergency care and then all the preventative benefits, such as the age preventative guidelines. So if you're a female over 50, you might get a mammogram every year. If you're over 55, you qualify for colonoscopies, things like that to help keep us healthy, screen for those cancers and those preventative benefits for that. So then we do offer tobacco cessations, any heart screenings, anything like that, that we, as an everyday person, might be worried about that. I might not have $3,000 for that heart screen, but with my insurance, I might only have to pay a $50 copay for that or be covered at 100%.
Host: Hollie, question for you on dollars, because that's a big thing on the minds of people when it comes to health insurance and the cost of medical services. Do you negotiate with providers, and tell us a little bit about how Sanford Health Plan goes about that and the types of things that they're able to offer?
Hollie Scott: So we have a team at the health plan that this is their job every day. They reach out to providers that make sure, you know, they're on the same path as the health plan and not only with care, but in what we charge our members. So when you have Sanford Health Plan, and you go to the doctor for, let's say your preventative visit, the doctor or provider might bill you $500 for that visit. But, because you have Sanford Health Plan, we've negotiated those prices so that they can only charge $300. Now with a preventative visit, the health plan would cover all of that cost so that not only helps keep your premiums down, but it also helps keep you covered and healthy because you're giving it that preventative service.
Host: How has COVID made an impact in health insurance, and what people are looking for from their health insurance provider?
Hollie Scott: With the COVID pandemic, we've seen a lot more usage. You know, the average sniffle now can be COVID. So we've seen a lot of people going in to be tested, which Sanford Health Plan covers at a hundred percent still, but we've, we've just seen a lot more usage, people being a little bit more cautious, you know, they're, they're worried. They don't want to get COVID obviously, but they're also worried about if they do get it, "I don't want to give it to my grandma. I want to be able to see my grandma or my parents." Or, like for me personally, I have a little 5-month-old, so I want to be very cautious so that she doesn't get it, because we just don't know a lot about it.
The health plan has been very understanding with our members, making sure that we've covered those costs that are COVID-related for our members. You know, at the very beginning, we covered the deductible costs for any member who went into the hospital because of COVID. So we've been very understanding with that with our members. So we also have a toolkit that we offer to our small businesses and large businesses as well. That just gives our, the employers, an option to go in and answer questions related to COVID. So an employer or employee might come to HR and say, you know, "Can I get my COVID vaccine? Can I get COVID tested? How is that covered?" We give those answers to those employers as well so they don't have to call our 1-800 number to get those answers to those questions.
Host: Carlos, I wanted to ask you about cost and some of the value that you see with Sanford Health Plan.
Carlos Cobos: I get a lot of questions about what this is going to cost me. And we compare health plans for our clients between different carriers and looking at costs, but it comes down to, to this. The insurance carriers are insuring the same population, so it's not like they are going to a different state or finding a small group of people that are super healthy and nobody's going to ever get sick. Nobody has high cholesterol; nobody has hypertension. Nobody has any incidence of cancer in their family history. They're all insuring the same group of people.
If an insurance carrier wants to reduce premiums, they can only do that in a certain number of ways. The ACA makes it law that an insurance carrier has to pay out 80% of all premiums collected in the form of medical claims, and that is to hospitals, doctors, and for prescriptions. So the only way to reduce pain claims and to lower premiums is to restrict usage, hospitalization, what is on the formulary. And we see this a lot with other carriers in that their formulary isn't quite as robust as what you will see in a, in a Sanford plant. So a formulary is just a fancy word for list of drugs, because for any ache, illness, disease, there's probably a dozen different prescriptions that a doctor could order for you. Well, the carriers and their pharmacy benefit managers will make out that formulary and say, "This is what we're going to cover as tier one, tier two, tier three, tier four, and so forth."
Sanford does a great job of bringing a lot of value of saying, "Here is a very good formulary. Here is what we will cover for those prescriptions. Here's what it's going to cost you." And the other thing that carriers do to save money is to offer different networks or have a restricted network. Sanford is able to say, "Here are our true plans, and that is a focus network." And it is generally going to be Sanford doctors in Sanford facilities. It's going to say 'Sanford' on the door, 'Sanford' on the lab coat. But with that focus network comes a little more focused premium. It's going to be a smaller premium. There's simplicity plans or a broad network where it doesn't necessarily have to say 'Sanford' on the front door, 'Sanford' on the lab coat. But with that broad network, that expanded network comes expanded premiums. So Sanford's able to offer a lot of value in saying, if you need that expanded network coverage, we can offer you that. If you don't and you would like to save some premium dollars, we can offer that to you as well, but they're not going to give you just one-size-fits-all for all groups. "Here's the network, here's the formulary. Here's everything else: take it or leave it." Sanford really has been very responsive to the needs of small businesses to be able to say, we can help you with that.
Host: Thank you, Carlos. Hollie, I wanted to move then and have you expand a little bit more on that. How might a business owner go about selecting the right kind of plan? What kinds of plans are there, and how do you do that? Maybe explain those.
Hollie Scott: Yeah. So when it comes to selecting a plan, there are a lot of variables. We could sit here for a couple hours talking about all the different avenues to explore. But when it comes down to it, really, it's going to be the size, your group. How many employees do you have to cover? And then your population that you're covering. Are you covering older people? Are you covering the younger people, the younger employees that are healthier? Do they take medications? How much do you know about your employees? So, you know, when you're sitting down pondering on what plan you're going to find, you're going to look at different medal levels. So with the Affordable Care Act, the ACA, there are different medal levels. We have gold, silver, bronze. We even have a platinum plan. If you have a population that wants to pay a little more premium and have a way better plan, we do have those options. So when you're really looking down, and you've decided, "Yep, I'm going to offer health insurance to my employees," you have to consider again, who you're covering, what kind of plan they might need and premium.
Premiums are a big deal to employees. And so you also want to consider, how much can the business cover of that premium and how much can my employees afford to cover as well? We have high deductible health plans. Those are getting traction. They're also known as HSA plans. Those are really becoming popular because people want a little more premium. They want to be able to put some money into a health savings account for some tax benefits. So there are a lot of things to consider. Carlos has seen probably more traction on the high deductible health plans recently in the marketplace because of those tax benefits for that health savings account. Most companies will think that they need a PPO versus an HMO because of the network. Sanford has both of those. We have a focused network, we have a broad network and for a small businesses, if you have five or more total employees, you can offer both of those to your employees. So we have lots of options, and we have great brokers like Carlos, you know, to help walk them through "what do I offer?" and "why are you offering this?"
Host: So you talked a lot about these different types. Let's talk about sizes of business, because I know at the start of the question here, you mentioned that you really can find what works for any size business. Is there a certain size or type of business that is typically better as a fit for a specific type?
Hollie Scott: So we have two segment sizes in our group health insurance. We have our small groups, which is a 1-to-50 sized group. And then we have 51-plus. Today, we're kind of focusing on that smaller group. For that group, it's not one-size-fits-all, because we might have a group that's a restaurant. And for them, maybe a bronze plan is better because they don't make as much income. We might have a small group that's a law office, and they want that platinum plan because they can afford it, and they don't want to have to pay as much when they go to the doctor. So, you know, we have plenty of options. If you have over five employees, you can offer multiple plans. So you might have someone who's in their 60s who needs better prescription coverage. And then you have this 21-year-old who doesn't care as much about the health insurance, just picking something in case something happens. They might want a bronze plan. So we can offer both of those. We have lots of options for our smaller groups.
Carlos Cobos: What Hollie's saying rings very true. We use the phrase "on average," quite a bit. On average, is this a younger group, or is this an older group? On average, is this more singles or is this, are there more families in this group? Because what she said is very true in what value a 21-year-old finds in a health insurance plan could be very different than a 35-year-old with three kids finds value in a health insurance plan, which could be very different from a 55-year-old empty-nester finds value in a health insurance plan. So being able to offer that wide array of plans will be able to help bring that group together and offer the benefits that they all need.
Host: I'm ready to start shopping. What other things might I consider in shopping for health insurance?
Carlos Cobos: Along with the costs of employee turnover, the premium, ben admin or benefits administration has a cost to it as well. How are we going to take care of this? What role does my broker play into this? Am I going to become the HR person as the business owner? I'm already the salesperson, the lead fabricator, lead janitor, and now I'm going to be the HR person and ben admin. So is there somebody that I can partner with that will help alleviate some of that burden of making sure that the applications are turned in, in a timely manner, make sure that the applications are all in good order with all of the information that's needed on there. Date of birth, social securities, everybody's name spelled, spelled correctly. And some of the tools out there as being able to benchmark what other employers are offering their employees. So what is a competitive rate of pay? What does a competitive benefits package look like? So being able to work with your broker, being able to work with your CPA, to determine what is going to be best for your company as you're moving forward, as you're on that trajectory of growth and adding employees, being able to have some trusted advisors and just not insurance salesman or salespeople becomes more and more important.
Host: Hollie, let's talk about monthly premiums. How much can a business afford when it comes to that? And how do you figure that out?
Hollie Scott: That's something that we, you know, advise every group to take a look at your books, talk with your advisor. As Carlos mentioned, get in contact with the CPA. Now at the health plan, we do advise that you as a business owner, pay 50% of the single premium, which is pretty average. A lot of employers now are seeing that to stay competitive, they need to pay a little bit more. So reach out to us at the health plan. We have a place on our website to request a quote or contact your broker. If you've worked with somebody like Carlos in the past with health insurance, reach out and get a quote and let's start there to see how much it would actually cost for your group. Because with the ACA, rates are so different than they were 10, 15 years ago. And we know that that is the most important thing to our employers now is how much is it going to cost, not only the business, but my employees, because as an employer, you care about them. You don't want to see their whole check go to just health insurance. So we have lots of resources for employers, but the first step is to reach out. Let us get you a quote, and let's start the conversation.
Host: Carlos, early on in the program, we talked about how important offering health insurance is in attracting employees and then keeping them. What kind of benefits are most important to employees?
Carlos Cobos: Every year, there are different groups that do benefit trend studies. And number one on the list is always health and then PTO, 401Ks or some type of retirement plan. And you have the dental, vision, life insurance, disability, different things like that that are more important to age demographics, but things that don't change are always health insurance. That's always at the top of the list. And that's what a new applicant always wants to know. When they say, what do you offer for benefits? What they're meaning is, what kind of group health insurance plan do you have here that I can join or that I, me and my family can get onto, and what's it going to cost me? And that's what they're really wanting to know, because that's important to them. And when a young person is hired, you know, take an average employer here, and he hires a young man, 21-years-old. He may be 22, and he's a great employee stays on. Well, then he's married. Then he has kids, and his life is evolving. His needs for health insurance are evolving, and the Sanford plans are there to walk that path with him as his needs change or her needs change. Then the health insurance plan is there to help them along the way. And an employer, a good employer will recognize that the needs for their employees are changing as they grow, as they mature, as certain things become more important to them, then their benefits are going to grow and change with them.
Host: A lot of employers these days take good stock in employee satisfaction surveys. Does health insurance play into that?
Carlos Cobos: Absolutely it does. In a recent survey, 62% of all employees nationwide said that benefits are more important to them now than ever before. And that health insurance played an important role in their safety protection and feeling of wellbeing in that that health insurance. Because people have been under this sustained increased level of stress for the last 12 months, that health insurance is helping to alleviate some of that stress, some of that worry, knowing that when they need health care, they can have it, because really the way that we access the health care markets here in the United States is through the health insurance markets. And by having that health insurance, they can get the care they need when they need it.
Hollie Scott: With Sanford Health Plan, we just want to make sure that our small employers understand that we're here as advisors. We're not just here to sell you insurance. We're here to help you through these difficult times. We want to make sure that you have the answers to your questions, whether you're ready to buy today, or if it's going to be six months down the road, when your business is ready and back up and moving, we're here for you. Reach out at any time for quotes. Any questions. You may have lots of resources within our communities in South Dakota and North Dakota, Minnesota, and Iowa.
Host: If you'd like to know more about the options through Sanford Health Plan, visit SanfordHealthPlan.com/employers. For Health Insurance Simplified, I'm Alan Helgeson.